How it works with the tax reduction on mortgages

Paying interest on a loan is not one of the most fun things you can do. And even if a mortgage loan has a relatively low interest rate, the size of the loan itself can make the interest amount that you have to pay at each payment occasion become very high.

The positive thing then is that you do not actually have to pay the entire sum.

The Swedish Tax Agency allows a reduction of 30% of interest expense. This means that you can get back quite a lot of money every year.

If you have a mortgage of 1.5 million and the interest rate is 6% (which you should calculate), this means that you have to pay USD 90,000 in interest for one year. Since you get 30% back, this means you get back 27,000 after the reduction.

You should expect that you have to manage to pay the entire sum and see the refund more as a bonus.

Business closeup of two hands exchanging dollars on grey background.

Then there is one thing to keep in mind and that is that if interest costs exceed USD 100,000 in one year, you will not get back 30% on the entire sum, but interest costs that exceed USD 100,000 you will only get back 21% on. For example, if you have USD 120,000 in interest expense over a year, you get back 30% of USD 100,000 which is USD 30,000 plus you get back 21% of USD 20,000 which is USD 4,200 which means that you get a total of back 34 200 kr.

The money will be paid out after the declaration and the sum is pre-filled on the declaration.

Because it is the case that you have to pay the entire interest amount on each repayment occasion and then get the money back on the tax refund. This is if you have not made a settlement for your mortgage as interest rates are dealt with directly.